Silicon Valley Bank collapse: What does it mean for interest rates and banks?

The collapse of Silicon Valley Bank (SVB) has reverberated across markets, with concerns emerging over the impact on the broader financial sector and global monetary policy.

Higher borrowing costs contributed to the collapse on 10 March. The worry now is what impact continued rate hikes could have on the sector.

It’s most likely this collapse won’t have a contagion effect though. For a start, European banks don’t face the same sort of problems as US banks. In the US, authorities have been shoring up confidence and have guaranteed all deposits at SVB, while HSBC acquired the bank’s UK operations.

But even if the worst-case scenario is avoided, the SVB saga does highlight certain risks within the monetary and financial systems.

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